Question
Carlton's Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to manufacture 60,000 units of Strands, which has a per-unit direct
Carlton's Kitchens makes two types of pasta makers: Strands and Shapes. The company expects to manufacture 60,000 units of Strands, which has a per-unit direct material cost of $8 and a per-unit direct labor cost of $60. It also expects to manufacture 40,000 units of Shapes, which has a per-unit material cost of $12 and a per-unit direct labor cost of $40. It is estimated that Strands will use 120,000 machine hours and Shapes will require 80,000 machine hours. Historically, the company has used the traditional allocation method and applied overhead at a rate of $11.13 per machine hour. It was determined that there were three cost pools, and the overhead for each cost pool is shown:
Machine Setups$115,500Machine Processing2,000,000Material Requisitions110,000Total Overhead$2,225,500
The cost driver for each cost pool and its expected activity is shown:
StrandsShapesTotalMachine Setups110220330Machine Hours120,00080,000200,000Parts Requisitions80120200
A.What is the per-unit cost for each product under the traditional allocation method?Round your answers to two decimal places.
StrandsShapesTotal per unit cost$fill in the blank 1
$fill in the blank 2
B.What is the per-unit cost for each product under ABC costing?Round your answers to two decimal places.
StrandsShapesTotal cost$fill in the blank 3
$fill in the blank 4
C.Compared to ABC costing, was each product's overhead under- or overapplied?
D.By how much was overhead under- or overapplied for each product?Round your answers to two decimal places.
OverheadAmountsStrands
$fill in the blank 6
Shapes
$fill in the blank 8
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